New York State Estate Tax Attorney
Middle Class Tax Relief Act of 2010
Congress has given the American public both a Christmas and a New Year’s present for both 2011 and 2012 and President Obama has signed this Tax Relief Act into law. This Tax Relief Act and Federal Estate Tax will apply to individuals who die in 2011 and 2012. For the next two (2) years, there will be two (2) choices for an estate tax return.
Option #1 – There will be a $5,000.00 estate tax exemption. Any portion of the value of the estate over 5 million dollars will be taxed at a tax rate that maxes out at 35%. There will also be, as we’ve had in the past, a “stepped-up” tax basis for real property that is inherited. The “stepped-up” tax basis will be the value on the date of death for capital gains tax purposes.
Option #2 – There can be an election out of the new Estate Tax, however, in this situation there will only be a very limited ability to have a “stepped-up” cost basis in inherited real property to utilize date of death values for capital gains tax purposes. This would utilize the 2001 George Bush Tax Law.
2010 was a wonderful year to die for Estate Tax purposes. This is because there was no Federal Estate Tax for the estates of individuals dying in 2010. It should be noted that if an individual died in 2010, his fiduciary only had a very limited ability to utilize a stepped up basis for inherited property to be valued at date of death valuation for capital gains tax purposes. As Congress failed to act, the Federal Estate Tax Exemption would have gone all the way back down to one million dollars per person and the Estate Tax rate would have gone up to 55%.
When one spouse dies and the remaining spouse inherits all of the deceased spouse’s assets, up until now, they would not be able to keep the deceased spouse’s exemption under the new Estate Tax law. Under the new law, the husband has a five (5) million dollar Federal Estate Tax Exemption and the wife also has a five (5) million dollar Estate Tax Exemption.
For 2011 and 2012 when one spouse dies, the five (5) million dollar exemption is “Portable” which means that the surviving spouse inherits this exemption. A married couple therefore ends up with ten (10) million dollars in estate exemptions.
This new law does not have any impact on the New York State Estate Tax. New York is one of the few states in the United States that subjects it’s residents to an Estate Tax in addition to the Federal Inheritance Tax. The New York State exemption rate for Estate Tax purposes is only one (1) million dollars. The New York State Inheritance Tax rate tops out at the rate of 16%. Starting in the year 2011 there will be a five (5) million dollar lifetime exemption for gift taxes for each and every individual. This is an increase of 4 million dollars, from the gift tax rate that existed in 2010. Gifts by one person in excess of five (5) million dollars are also subject to Federal Gift Tax rates of 35%.
Should you have any questions with regard to estate taxation and/or estate planning to minimize estate taxes, feel free to call The Law Offices of Schlissel DeCorpo at 1-800-3446431, 516-561-6645 or 718-350-2802.
When It Comes To Estate Planning, Experience Matters
Contact the Nassau County / Queens Law Offices of Schlissel DeCorpo – Available 24/7
Contact An Experienced New York State Estate Tax Attorney Today
Contact us to discuss your estate tax matter and our qualifications to represent you. Feel free to call toll free, any time, day or night, at 1-800-344-6431 or contact us at 718-350-2802. You can also reach us in Nassau County at 516-561-6645.
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